Spotlight: Hawaii

The Aloha State says hello to millions of tourists every year.

There is no doubt that tourism is the major driving force behind Hawaii’s economy, and the tourism business has boomed in the Aloha State over the past
four years. The state topped 8 million visitors in 2012, a 10 percent increase over

2011, and that number has been growing ever since. The Hawaii Department of
Business, Economic Development & Tourism (DBEDT) projects that more than

9 million people will visit Hawaii in 2017.

The average length of stay for Hawaiian tourists is about nine days, so on average, more than 200,000 people are visiting the state — and spending money there — on any given day of the year. Total visitor expenditures for 2015

topped $15 billion dollars, and that number is expected to reach $16 billion in

2017 and $17 billion by 2018, according to DBEDT forecasts.

Agriculture, another mainstay of the Hawaiian economy, has undergone a recent transition because of declines in the sugar-cane industry. According to a

2013 report from the Hawaii Department of Agriculture, however, agricultural
products generated $2.9 billion for the state’s economy in 2012 and — directly
or indirectly — supported 42,000 jobs.

Hawaiian crops are more diversified today because the state’s vast sugar-cane
lands have been divided up into small farms growing exotic fruits, coffee, macadamia nuts and flowers that are sold to tourists in Hawaiian markets and exported around the world.

Some of those old sugar-cane lands also are being sold to developers for
both residential and commercial developments, which has been a boon for
the state’s construction industry. The construction sector added 4,400 jobs
in third-quarter 2016 alone, according to a DBEDT quarterly report. A report
published this past December by the University of Hawaii Economic Research
Organization (UHERO), asserts that much of the state’s payroll growth over the
past two years was “driven primarily by the construction upswing.”
The UHERO report mentions several troubling signs, however. The report
forecasts that growth in visitor days, a measure of tourism, will slow to 1 percent annually by the end of the decade as hotel space maxes out. And, even
though Hawaii has the fifth-lowest unemployment rate in the nation, the report states that real hourly wages have not yet surpassed their 2007 levels,
and the state’s median family income is still 4 percent lower than it was prior
to the Great Recession.

Perhaps most troubling is that consumer prices rose in Honolulu by 2.4 percent
year over year in the first half of 2016, after only increasing by 1 percent during
the same period in 2015. Much of this increase came from rising medical-care
costs, but recreation as well as food and beverage prices increased by more
than 3 percent. If left unchecked, this inflation could have a chilling effect on
the Aloha State’s booming tourism industry. n

Home sales and prices

Median single-family home prices across the state of Hawaii tumbled in
the first few years after the housing crash, dropping from $338,900 in

2008 to $252,913 in 2011, a 25 percent decrease. Sales rebounded before
median prices, increasing every year from 2010 through 2015, according
to data from the Hawaii Association of Realtors. As of 2015, Hawaii statewide median housing prices had nearly returned to 2008 levels.

The strongest markets in Hawaii are on the islands of Oahu and Maui.

The median housing price on the four islands in the county of Maui
was $635,000 this past November, up 13. 3 percent from the November

2015 median price of $550,000. On Oahu, home to Honolulu, the median price on single-family homes reached $750,000 this past November,
up 4. 8 percent from November 2015’s median price of $715,500.

Hawaii Home Sales

Source: Hawaii Association of Realtors

Median sales price Total home sales

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

$0

$50

$100

$150

$200

$250

$300

$350

$400

2008 2009 2010 2011 2012 2013 2014 2015

Mark Morris

Realtor, Coldwell Banker Island Properties“We just had a shift in a major agricultural company here[on Maui], which is going out of industrial farming of canesugar. They are releasing lands onto the market, and a lot ofother subdivisions are being released by other developers,so the expansion we’re going to see on Maui is going to bequite significant over the next 20 or 30 years.